M/s. Best Infrastructure (India) Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2739/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6763 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-01-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: ASHISH JAIN; VED JAIN MRS RANO JAIN S
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained expenditure; Search and seizure; Document seized; Accommodation entries; Documents seized
• Section: 69C; 153A; 133(6); 132; 15; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SHRI KULDIP SINGH SHRI KULDIP SINGH SHRI KULDIP SINGH SHRI KULDIP SINGH, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO S SS S . .. . 2739/DEL/2014, 2740/DEL/2014, 2741/DEL/2014 & 2742/ DEL/2014 2739/DEL/2014, 2740/DEL/2014, 2741/DEL/2014 & 2742/ DEL/2014 2739/DEL/2014, 2740/DEL/2014, 2741/DEL/2014 & 2742/ DEL/2014 2739/DEL/2014, 2740/DEL/2014, 2741/DEL/2014 & 2742/ DEL/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2005 2005 2005 2005 - -- - 06, 2006 06, 2006 06, 2006 06, 2006 - -- - 07, 200 07, 200 07, 200 07, 200 7 77 7 - -- - 08 & 2008 08 & 2008 08 & 2008 08 & 2008 - -- - 09 0909 09 M/S BEST INFRASTRUCTURE M/S BEST INFRASTRUCTURE M/S BEST INFRASTRUCTURE M/S BEST INFRASTRUCTURE (INDIA) PVT.LTD., (INDIA) PVT.LTD., (INDIA) PVT.LTD., (INDIA) PVT.LTD., PLOT NO.H PLOT NO.H PLOT NO.H PLOT NO.H- -- -8, 1 8, 1 8, 1 8, 1 ST STST ST FLOOR, FLOOR, FLOOR, FLOOR, BEST PLAZA, BEST PLAZA, BEST PLAZA, BEST PLAZA, NETAJI SUBHASH PLACE, NETAJI SUBHASH PLACE, NETAJI SUBHASH PLACE, NETAJI SUBHASH PLACE, PITAMPURA, PITAMPURA, PITAMPURA, PITAMPURA, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 034. 110 034. 110 034. 110 034. PAN : AACCB5568R. PAN : AACCB5568R. PAN : AACCB5568R. PAN : AACCB5568R. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -11, 11, 11, 11, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLAN T) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO S.2743/DEL/2014 AND 2744/DEL/2014 S.2743/DEL/2014 AND 2744/DEL/2014 S.2743/DEL/2014 AND 2744/DEL/2014 S.2743/DEL/2014 AND 2744/DEL/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2007 2007 2007 2007 - -- - 08 & 2008 08 & 2008 08 & 2008 08 & 2008 - -- - 09 0909 09 M/S BEST CITY DEVELOPERS M/S BEST CITY DEVELOPERS M/S BEST CITY DEVELOPERS M/S BEST CITY DEVELOPERS INDIA PVT.LTD., INDIA PVT.LTD., INDIA PVT.LTD., INDIA PVT.LTD., PLOT NO.H PLOT NO.H PLOT NO.H PLOT NO.H- -- -8, 1 8, 1 8, 1 8, 1 ST STST ST FLOOR, FLOOR, FLOOR, FLOOR, BEST PLAZA, BEST PLAZA, BEST PLAZA, BEST PLAZA, NETAJI SUBHASH PLACE, NETAJI SUBHASH PLACE, NETAJI SUBHASH PLACE, NETAJI SUBHASH PLACE, PITAMPURA, PITAMPURA, PITAMPURA, PITAMPURA, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 034. 110 034. 110 034. 110 034. PAN : AACCB5568R. PAN : AACCB5568R. PAN : AACCB5568R. PAN : AACCB5568R. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -11, 11, 11, 11, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT S BY : SHRI VED JAIN, MRS. RANO JAIN, ADVOCATES AND SHRI ASHISH JAIN, CA. RESPONDENT BY : SHRI RAVI JAIN, CIT - DR. DATE OF HEARING : 19.01.2017 19.01.2017 19.01.2017 19.01.2017 DATE OF PRONOUNCEMENT : 08.02.2017 08.02.2017 08.02.2017 08.02.2017 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THESE APPEALS BY THE ASSESSEES FOR THE ASSESSMENT YEARS 2005- 06 TO 2008-09 ARE DIRECTED AGAINST THE ORDERS OF LE ARNED CIT(A)-XXXI, NEW DELHI DATED 28 TH FEBRUARY, 2014 AND 11 TH MARCH, 2014. ITA-2739 TO 2744/DEL/2014 2 ITA NO.2739/DEL/2014 ITA NO.2739/DEL/2014 ITA NO.2739/DEL/2014 ITA NO.2739/DEL/2014 BEST INFRASTRUCTURE (INDIA) PVT.LTD. BEST INFRASTRUCTURE (INDIA) PVT.LTD. BEST INFRASTRUCTURE (INDIA) PVT.LTD. BEST INFRASTRUCTURE (INDIA) PVT.LTD. AY : 2005 AY : 2005 AY : 2005 AY : 2005- -- -06 : 06 : 06 : 06 :- -- - 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1. THE LD. AO HAS ERRED IN LAW AND IN FACTS OF THE CASE IN MAKING ADDITIONS IN THE ASSESSMENT FRAMED U/S 153A, WHICH IS NOT BASED UPON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH AND THE LD.AO HAS F URTHER ERRED IN MAKING THE ASSESSMENT IN VIEW OF THE FACT THAT THE ASSESSMENT WAS NOT PENDING AS ON THE DATE OF THE SE ARCH, WHICH IS INCORRECT, UNJUSTIFIED, BAD IN LAW AND VOI D-AB-INITIO. 2. THE LD.AO HAS ERRED BOTH ON FACTS AND IN LAW IN MAKING THE ADDITION OF RS.2,46,00,000/- U/S 68 ON A CCOUNT OF SHARE CAPITAL ISSUED BY THE ASSESSEE COMPANY AND HELD THE SAME TO BE UNDISCLOSED INCOME OF THE ASSESSEE COMPANY, WHICH IS ARBITRARY, CONTRARY TO THE FACTS AND BAD IN LAW. 3. THE LD.AO HAS ERRED IN LAW & FACTS OF THE CASE I N ADDING RS.5,53,500/- U/S 69C ON ACCOUNT OF ALLEGED PAYMENT OF COMMISSION FOR OBTAINING ACCOMMODATION ENTRIES, WHICH IS HIGHLY ARBITRARY, UNJUSTIFIED, BA D IN LAW, UNCALLED FOR AND MERELY ON PRESUMPTION OF THE LD.AO . 4. THE ASSESSEE CRAVES THE RIGHT TO ADD, AMEND OR MODIFY ANY GROUND OF APPEAL. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THIS IS THE SECOND ROUND OF ASSESSMENT U/S 153A OF THE INCOME-TAX ACT, 1961. HE POINTED OUT THE SEARCH AN D SEIZURE ACTION TOOK PLACE AT THE ASSESSEES PREMISES SECOND TIME O N 28 TH MARCH, 2011. A NOTICE U/S 153A WAS ISSUED ON 12 TH MARCH, 2012, IN RESPONSE TO WHICH, ASSESSEE FILED THE RETURN OF INCOME DECLA RING LOSS OF `43,287/- ON 9 TH MARCH, 2012. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AT `6,19,20,213/-, IN WHICH, APART FROM TAKING THE ASSESSED ITA-2739 TO 2744/DEL/2014 3 INCOME AS PER ORDER U/S 153A DATED 30 TH DECEMBER, 2010, HE MADE THE FOLLOWING ADDITIONS :- (I) ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT RS.24600000/- (II) ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE 69C OF THE IT ACT RS.553500/- 4. THE SAME IS SUSTAINED BY THE LEARNED CIT(A). HE STATED THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. KABUL CHAWLA [2016] 380 ITR 573 (DELHI) AND CIT VS. RRJ SECURITI ES LTD. [2016] 380 ITR 612 (DELHI) HAVE TAKEN THE VIEW THAT IN THE ABS ENCE OF INCRIMINATING MATERIAL, NO ADDITION U/S 153A CAN BE MADE. THAT, AS PER REVENUE, PAGES 70 TO 74 OF ANNEXURE A-1 IS THE INCR IMINATING DOCUMENT WHICH GIVES THE DETAILS OF TRANSFER OF SHA RES BY THE INITIAL ALLOTTEES TO THE PROMOTER GROUP COMPANY AT 10% OF T HE COST. HE SUBMITTED THAT PAGES 70 TO 74 OF ANNEXURE A-1 IS TH E ANNEXURE TO THE COPY OF THE ANNUAL RETURN FILED WITH THE REGISTRAR OF COMPANIES. IN THE ANNUAL RETURN TO BE FURNISHED BEFORE THE REGISTRAR OF COMPANIES, THE ASSESSEE HAS TO FURNISH THE DETAILS OF THE TRANSFER OF SHARES DURING THE YEAR UNDER CONSIDERATION. SINCE THERE IS NOT SUFFI CIENT SPACE TO MENTION THE DETAILS OF ALL THE TRANSFER OF SHARES T AKEN PLACE DURING THE RELEVANT YEAR, SUCH DETAILS WERE TYPED IN SEPARATE LIST AND ANNEXED WITH THE SAID ANNUAL RETURN FILED BEFORE SEARCH WIT H R.O.C. THIS ANNEXURE WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH AND MARKED AS ANNEXURE A-1 PAGES 70 TO 74. THAT THIS D OCUMENT IS DATED 10 TH MARCH, 2011 AND IN THE LIST, THERE IS DETAIL OF TR ANSFER OF SHARES OF THE ASSESSEE COMPANY. THE SHARES HAVE BEEN TRANSFE RRED BY AND BETWEEN TWO INDEPENDENT PERSONS. HE REFERRED TO IT EM NO.1 AND POINTED OUT THAT SHARES HAVE BEEN TRANSFERRED BY GA URI SHANKER PAINTS ITA-2739 TO 2744/DEL/2014 4 & CHEMICALS TO BEST REALTORS (INDIA) PVT.LTD. THE ASSESSEE HAS NEITHER TRANSFERRED THE SHARES NOR ACQUIRED THE SHARES. TH E ASSESSEE NEITHER RECEIVED A SINGLE RUPEE NOR PAID A SINGLE RUPEE. T HUS, THERE WAS NO FINANCIAL TRANSACTION BY OR BETWEEN THE ASSESSEE BY VIRTUE OF THE TRANSFER OF SHARES. THAT A DOCUMENT WHICH IS ONLY AN ANNEXURE TO AN ANNUAL RETURN FILED WITH THE REGISTRAR OF COMPANIES CANNOT BE SAID TO BE INCRIMINATING DOCUMENT. MOREOVER, BY VIRTUE OF SUCH DOCUMENT, NO FINANCIAL TRANSACTION BY THE ASSESSEE COMPANY IS IN DICATED AND THE SAID DOCUMENT PERTAINS TO FINANCIAL YEAR 2010-11 AN D NOT TO THE YEAR UNDER CONSIDERATION. IN VIEW OF THE ABOVE, HE STAT ED THAT THE DECISIONS OF KABUL CHAWLA (SUPRA) AND RRJ SECURITIES LTD. (SU PRA) WOULD BE SQUARELY APPLICABLE. HE, THEREFORE, REQUESTED THAT THE ADDITION FOR UNEXPLAINED SHARE CAPITAL AS WELL AS ALLEGED COMMIS SION ON THE ABOVE SHARE CAPITAL SHOULD BE DELETED. 5. LEARNED CIT-DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF AUTHORITIES BELOW AND HE STATED THAT THIS DOCUMENT INDICATED THAT THE SHARES HAVE ULTIMATELY BEEN TRANSFERRED TO THE COMP ANY OF SAME GROUP AND, THEREFORE, LEARNED CIT(A) AS WELL AS ASSESSING OFFICER HAS RIGHTLY TAKEN THE VIEW THAT THE DOCUMENT FOUND AND SEIZED D URING THE COURSE OF SEARCH WAS INCRIMINATING DOCUMENT AND SECTION 15 3A WAS APPLICABLE. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT SATISFACTORILY DISCHARGE THE ONUS OF PROVING TH E SHARE CAPITAL AND THEREFORE, THE ADDITION FOR THE SAME HAS BEEN RIGHT LY MADE AND SUSTAINED BY THE LEARNED CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND HAVE PERUSED THE MATERIAL PLACED BEFORE US. THE FACTS O F THE CASE ARE THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILE D THE RETURN OF INCOME DECLARING LOSS OF `43,287/- ON 27 TH OCTOBER, 2005. THE SAME WAS ACCEPTED U/S 143(1). THE SEARCH AND SEIZURE OP ERATION WAS ITA-2739 TO 2744/DEL/2014 5 CARRIED OUT AT THE ASSESSEES BUSINESS PREMISES ON 15 TH SEPTEMBER, 2008. PROCEEDINGS U/S 153A WERE INITIATED AND ASSE SSMENT U/S 153A WAS COMPLETED ON 30 TH DECEMBER, 2010 IN WHICH, THE ADDITION OF `3,60,00,000/- FOR UNEXPLAINED CASH CREDIT WAS MADE . THE ITAT, VIDE ORDER DATED 31 ST DECEMBER, 2016 IN ITA NO.1698/DEL/2014 AND OTHERS, DELETED THE ADDITION FOLLOWING THE DECISION OF HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) AND RRJ SECURITIES LTD. (SUPRA). ANOTHER SEARCH U/S 132A TOOK PLACE AT THE ASSESSEES BUSINESS PREMISES ON 28 TH MARCH, 2011. AGAIN, NOTICE U/S 153A WAS ISSUED AND IN PURSUANCE THERETO, ASSESSMENT WAS COM PLETED U/S 153A ON 28 TH MARCH, 2013 IN WHICH, THE ASSESSING OFFICER MADE T HE ADDITION OF `2,46,00,000/- FOR UNEXPLAINED CASH CREDIT WHICH IS SUSTAINED BY LEARNED CIT(A), HENCE, THIS APPEAL BY THE ASSESSEE. 7. THE SCOPE OF ASSESSMENT U/S 153A IS DEFINED BY H ON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAW LA (SUPRA), WHEREIN, HON'BLE DELHI HIGH COURT, AFTER CONSIDERING THE DEC ISIONS OF OTHER HIGH COURTS AND TRIBUNAL, HAS SUMMARIZED THE POSITION IN PARAGRAPH NOS.37 & 38 OF THEIR DECISION, WHICH IS REPRODUCED BELOW : - SUMMARY OF THE LEGAL POSITION. 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGA L POSITION THAT EMERGES IS AS UNDER:- I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES P LACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SU CH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXER CISE. ITA-2739 TO 2744/DEL/2014 6 III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A Y IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WI LL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIO NS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FO UND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATE RIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELA TED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSES SMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEI ZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABAT ED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153A IS RELATABLE TO ABATED PRO CEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONL Y ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTH ER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE A O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 15 3A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UN EARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUM ENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCL OSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS 2002-03, 2005-0 6 AND 2006-07. ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO ITA-2739 TO 2744/DEL/2014 7 INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEA RCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREAD Y ASSESSED. 8. SIMILAR VIEW IS EXPRESSED BY THEIR LORDSHIPS IN THE CASE OF RRJ SECURITIES LTD. (SUPRA). IN THIS CASE, IN PARAGRAP H 21, THEIR LORDSHIPS HELD AS UNDER :- IN RESPECT OF SUCH ASSESSMENTS WHICH HAVE ABATED, THE AO WOULD HAVE THE JURISDICTION TO PROCEED AND MAKE AN ASSESSMENT. HOWEVER, IN RESPECT OF CONCLUDED ASSESSMENTS, THE AO WOULD ASSUME JURISIDCITON TO RE ASSESS PROVIDED THAT THE ASSETS/DOCUMENTS RECEIVED BY THE AO REPRESENT OR INDICATE ANY UNDISCLOSED INCOME OR POS SIBILITY OF ANY INCOME THAT MAY BE REMAINED UNDISCLOSED IN T HE RELEVANT ASSESSMENT YEARS. THIS COURT IN COMMISSIO NER OF INCOME TAX (CENTRAL)-III V. KABUL CHAWLA : ITA 707/ 2014, DECIDED ON 28 TH AUGUST, 2015 HAS HELD THAT COMPLETED ASSESSMENTS COULD ONLY BE INTERFERED WITH BY THE AO ON THE BASIS OF ANY INCRIMINATING MATERIAL UNEARTHED D URING THE COURSE OF THE SEARCH OR REQUISITION OF THE DOCU MENTS. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE AO DO ES NOT HAVE ANY JURISDICTION TO INTERFERE IN CONCLUDED ASSESSMENTS. 9. THUS, THEIR LORDSHIPS HAVE CLEARLY HELD THAT OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL. IN THE ABSENCE OF ANY INCRIMINATI NG MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABAT ED ASSESSMENT OR REASSESSMENT CAN BE MADE . THEREFORE, THE BASIC QUESTION BEFORE US IS TO EXAMINE WHETHER THE PAGES 70 TO 74 OF ANNE XURE A-1 CAN BE SAID TO BE INCRIMINATING MATERIAL FOR THE PURPOSE O F SECTION 153A. ADMITTEDLY, PAGES 70 TO 74 OF ANNEXURE A-1 ARE THE LIST GIVING THE DETAILS OF TRANSFER OF SHARES DURING THE FINANCIAL YEAR 2010-11. THE ASSESSEE HAS FILED BEFORE US THE COPY OF ANNUAL RET URN FURNISHED BY IT BEFORE THE REGISTRAR OF COMPANIES ON 10 TH MARCH, 2011. IN PART VI OF THE ANNUAL RETURN, THE ASSESSEE IS REQUIRED TO FURN ISH THE DETAILS OF SHARES/DEBENTURES TRANSFERS SINCE THE DATE OF LAST AGM. IN THE RETURN, ITA-2739 TO 2744/DEL/2014 8 THE ASSESSEE MENTIONED AS PER LIST ATTACHED. THE N, IN THE LIST, THE ASSESSEE HAS GIVEN THE REQUIRED DETAILS. THE COPY OF THE SAID LIST IS ANNEXED HEREWITH AS ANNEXURE ANNEXURE ANNEXURE ANNEXURE- -- -A AA A TO THIS ORDER. FROM THIS LIST, WE FIND THAT IT GIVES THE DETAILS OF DATE OF SHARE TRANSFER , TYPE OF TRANSFER, NUMBER OF SHARES TRANSFERRED, AMOUNT PER SHARE, LED GER FOLIO OF TRANSFER, TRANSFERORS NAME AND TRANSFEREES NAME. AT THE OUTSET, WE FIND THAT THIS LIST PERTAINS TO SHARES TRANSFERRED BETWEEN FINANCIAL YEAR 2010-11. THEREFORE, THIS DOCUMENT IS RELEVANT TO F INANCIAL YEAR 2010- 11 I.E., ASSESSMENT YEAR 2011-12. ADMITTEDLY, THE APPEALS BEFORE US ARE OF ASSESSMENT YEARS 2005-06 TO 2008-09 AND THER EFORE, THIS DOCUMENT DOES NOT PERTAIN TO THE YEAR UNDER APPEAL. ON THIS GROUND ALONE, IT CAN BE SAID THAT NO INCRIMINATING DOCUMEN TS RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION WERE FOUND. HO WEVER, WE ARE ALSO OF THE OPINION THAT THIS DOCUMENT CANNOT BE SA ID TO BE INCRIMINATING DOCUMENT. A COPY OF AN ANNEXURE TO T HE ANNUAL RETURN ALREADY FURNISHED BY THE ASSESSEE WITH THE REGISTRA R OF COMPANIES BEFORE THE DATE OF SEARCH AS A PART OF THE ANNUAL R ETURN WHICH IS TO BE FURNISHED IN THE STATUTORY FORM CAN NEVER BE SAID T O BE AN INCRIMINATING DOCUMENT. MOREOVER, THE SHARES ARE T RANSFERRED BY ONE PERSON TO ANOTHER. THE ASSESSEE IS NEITHER TRANSFE ROR NOR THE TRANSFEREE. SO FAR AS THE ASSESSEE IS CONCERNED, N O FINANCIAL TRANSACTION TOOK PLACE BY THE ASSESSEE EVEN DURING THE FINANCIAL YEAR 2010-11. IN VIEW OF THE ABOVE, WE HOLD AS UNDER :- (I) PAGES 70 TO 74 OF ANNEXURE A-1 CANNOT BE SAID T O BE INCRIMINATING DOCUMENT. (II) THESE PAPERS ARE PERTAINING TO FINANCIAL YEAR 2010-11 AND THEREFORE, NOT RELEVANT TO THE ASSESSMENT YEAR UNDE R APPEAL. ITA-2739 TO 2744/DEL/2014 9 10. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING TH E DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KA BUL CHAWLA (SUPRA) AND RRJ SECURITIES LTD. (SUPRA), WE HOLD THAT THE A DDITIONS OF `2,46,00,000/- AND `5,53,500/- ARE BEYOND THE SCOPE OF ASSESSMENT UNDER SECTION 153A OF THE ACT. ACCORDINGLY, THE SA ME ARE DELETED. ITA NO.2740 TO 2742 ITA NO.2740 TO 2742 ITA NO.2740 TO 2742 ITA NO.2740 TO 2742/DEL/2014 /DEL/2014 /DEL/2014 /DEL/2014 BEST INFRASTRUCTURE (INDIA) PVT.LTD. BEST INFRASTRUCTURE (INDIA) PVT.LTD. BEST INFRASTRUCTURE (INDIA) PVT.LTD. BEST INFRASTRUCTURE (INDIA) PVT.LTD. AY : 2006 AY : 2006 AY : 2006 AY : 2006- -- -07, 2007 07, 2007 07, 2007 07, 2007- -- -08 & 2008 08 & 2008 08 & 2008 08 & 2008- -- -09 0909 09 : :: :- -- - 11. AT THE TIME OF HEARING BEFORE US, BOTH THE PART IES AGREED THAT THE GROUNDS RAISED AND THE FACTS IN THESE YEARS ARE IDE NTICAL TO THE FACTS AND GROUNDS RAISED IN THE ASSESSMENT YEAR 2005-06. SIMILAR ADDITIONS FOR SHARE CAPITAL AS WELL AS ALLEGED PAYMENT OF COM MISSION ARE MADE IN THESE YEARS ALSO, THE DETAILS OF WHICH ARE AS UN DER :- ITA NO. AY ADDITION FOR UNEXPLAINED SHARE CAPITAL ADDITION FOR ALLEGED EXPENDITURE ON COMMISSION 2740/DEL/2014 2006 - 07 3,70,05,000/ - 8,32,612/ - 2741/DEL/2014 2007 - 08 4,84,50,000/ - 10,90,125/ - 2742/DEL/2014 2008 - 09 1,11,50,000/ - 2,50,875/ - 12. WE HAVE ALREADY DECIDED THE APPEAL OF THE ASSES SEE FOR ASSESSMENT YEAR 2005-06 ABOVE VIDE ITA NO.2739/DEL/ 2014 AND, FOR THE DETAILED DISCUSSION THEREIN, WE HOLD THAT THERE WAS NO INCRIMINATING MATERIAL RELATING TO ASSESSMENT YEAR 2006-07, 2007-08 & 2008-09 SO AS TO JUSTIFY THE ADDITION FOR UNEXPLAIN ED SHARE CAPITAL AS WELL AS ADDITION FOR ALLEGED EXPENDITURE ON COMMISS ION. ACCORDINGLY, WE DELETE BOTH THE ABOVE ADDITIONS AND ALLOW THE AP PEALS OF THE ASSESSEE. ITA-2739 TO 2744/DEL/2014 10 ITA NO.27 ITA NO.27 ITA NO.27 ITA NO.2743 4343 43/DEL/2014 /DEL/2014 /DEL/2014 /DEL/2014 & 2744/DEL/2014 & 2744/DEL/2014 & 2744/DEL/2014 & 2744/DEL/2014 BEST BEST BEST BEST CITY DEVELOPERS INDIA CITY DEVELOPERS INDIA CITY DEVELOPERS INDIA CITY DEVELOPERS INDIA PVT.LTD. PVT.LTD. PVT.LTD. PVT.LTD. AY AYAY AY 2007 2007 2007 2007- -- -08 & 2008 08 & 2008 08 & 2008 08 & 2008- -- -09 0909 09 : :: :- -- - 13. IN BOTH THESE APPEALS ALSO, A SIMILAR GROUND HA S BEEN RAISED CHALLENGING THE FOLLOWING ADDITIONS IN THE ASSESSME NT FRAMED U/S 153C ON THE GROUND THAT NO INCRIMINATING MATERIAL WAS FO UND :- ITA NO. AY ADDITION FOR UNEXPLAINED SHARE CAPITAL ADDITION FOR ALLEGED EXPENDITURE ON COMMISSION 2743/DEL /2014 2007 - 08 83,00,000/ - 1,86,750/ - 2744/DEL/2014 2008 - 09 7,17,00,000/ - 16,13,250/ - 14. AT THE TIME OF HEARING BEFORE US, THE LEARNED C OUNSEL FOR THE ASSESSEE HAS POINTED OUT THAT LEARNED CIT(A) IN HIS COMMON ORDER FOR BOTH THE YEARS HAS DISCUSSED THE MATERIAL FOUND AND SEIZED FROM PAGES 6, 7 & 8 OF HIS ORDER AND HAS COME TO THE CONCLUSIO N THAT NONE OF THE ABOVE PAPERS IS INCRIMINATING MATERIAL, BUT, IF THE Y ARE READ WITH PAGES 70 TO 74 OF ANNEXURE A-1 FOUND IN THE CASE OF M/S B EST INFRASTRUCTURE (INDIA) PVT.LTD., THEN ONLY THE DOCUMENTS CONSIDERE D IN THE CASE OF THE ASSESSEE I.E., M/S BEST CITY DEVELOPERS (INDIA) PVT .LTD., WOULD BE INCRIMINATING DOCUMENTS. BOTH THE PARTIES THEREFOR E AGREED THAT, IN EFFECT, THESE APPEALS ARE CONSEQUENTIAL BECAUSE, IF DOCUMENTS AT PAGES 70 TO 74 OF ANNEXURE A-1 ARE HELD TO BE INCRI MINATING MATERIAL IN THE CASE OF M/S BEST INFRASTRUCTURE (INDIA) PVT.LTD ., THE DOCUMENTS FOUND IN THE CASE OF THE ASSESSEE WOULD BE INCRIMIN ATING MATERIAL, OTHERWISE NOT. 15. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. FOR REA DY REFERENCE, WE DEEM IT PROPER TO REPRODUCE THE RELEVANT PARAGRAPHS OF LEARNED CIT(A)S ORDER WHEREIN HE HAS DISCUSSED THE SEIZED MATERIAL IN THE CASE OF THE ASSESSEE :- ITA-2739 TO 2744/DEL/2014 11 DETAILS OF SEIZED DOCUMENTS PERTAINS TO PARTIES OTH ER THAN PARTIES WHICH HAS BEEN SEARCHED U/S 132 OF THE IT ACT, 1961 BEST CITY DEVELOPERS A - 1 PAGE - 59, 60, 61 A - 2 A - 3 PAGE - 41, 42, 43, 64, 66 A - 4 PAGE - 72, 73 4.2.2 I HAVE GONE THROUGH THE PAGES OF SEIZED ANNEX URES REFERRED TO IN THE AFORESAID SECTION NOTE. THE RELEVANT PAGES OF THE SEIZED ANNEXURES REFERRED TO IN THE SATISFACTION NOTE OF THE AO WHILE INITIATING PR OCEEDINGS U/S 153C ARE AS FOLLOWS : BEST CITY DEVELOPERS INDIA PRIVATE BEST CITY DEVELOPERS INDIA PRIVATE BEST CITY DEVELOPERS INDIA PRIVATE BEST CITY DEVELOPERS INDIA PRIVATE LIMITED LIMITED LIMITED LIMITED 1. ANNEXURE-A-1 A. PAGE 59 THIS IS A CHALLAN OF MINISTRY OF CORPO RATE AFFAIRS (G.A.R. 7) FOR PAYMENT OF FEES FOR FORM 66 FOR THE F.Y. 2009-10 OF RS.5000/- PAID INTO ICICI BANK CP B RANCH NEW DELHI. B. PAGE 60 IS A CHALLAN OF MINISTRY OF CORPORATE AFFAIRS (G.A.R. 7) FOR PAYMENT OF FEES FOR FORM 23AC FOR TH E F.Y. 2009-10 OF RS.5000/- PAID INTO ICICI BANK CP BRANCH NEW DELHI. C. PAGE 61 IS A CHALLAN OF MINISTRY OF CORPORATE AFFAIRS (G.A.R. 7) FOR PAYMENT OF FEES FOR FORM 20B FOR THE F.Y. 2009-10 OF RS.5000/- PAID INTO ICICI BANK CP BRANCH NEW DELHI. 2. ANNEXURE-A-3 A. PAGES 41, 42, 43 ARE BANK STATEMENTS OF THE APPELLANTS ACCOUNT NO.629805 019802 FOR THE MONTHS OF JANUARY, FEBRUARY AND MARCH 2011 RESPECTIVELY MAINT AINED WITH ICICI BANK, ROHINI, DELHI. B. PAGE 64 THIS IS RTGS TRANSACTION REQUEST FORM OF AXIS BANK LTD DATED 28/02/2011 FOR TRANSFER OF RS.1 CRORE FROM BEST CYBER CITY INDIA PRIVATE LIMITED TO THE A PPELLANT COMPANY. ITA-2739 TO 2744/DEL/2014 12 C. PAGE 66 THIS IS A LETTER OF THE APPELLANT REQU ESTING THE BRANCH MANAGER, ICICI BANK LTD, ROHINI, DELHI T O TRANSFER FUNDS (1.3 CRORES) FROM THEIR ACCOUNT TO T HE ACCOUNT OF BEST CITY DEVELOPERS INDIA PRIVATE LIMIT ED. 3. ANNEXURE-A-4 A. PAGE 72 THIS IS THE LEDGER ACCOUNT OF DIKSHA S ALES PRIVATE LIMITED FOR THE PERIOD 01/04/2006 TO 09/11/2010 IN THE BOOKS OF THE APPELLANT COMPANY WHICH CONTAINS THE TRANSACTION OF VALUE RS.10 LACS TOWARDS SHARE APPLICATION AND ITS ALLOTMENT. B. PAGE 73 THIS IS AN UNDATED LETTER OF DIKSHA SA LES PRIVATE LIMITED ADDRESSED TO ACIT, ROOM NO.318, INC OME TAX OFFICE, JHANDEWALAN EXTENSION, WRITTEN IN RESPO NSE TO NOTICE U/S 133(6) FOR A.Y. 2007-08 CONFIRMING THAT THEY HAVE INVESTED RS.10 LAKH IN THE SHARE CAPITAL OF TH E APPELLANT COMPANY. 4.2.3 FROM THE ABOVE SEIZED DOCUMENTS IT IS SEEN TH AT THE DOCUMENTS AVAILABLE IN ANNEXURE A-4 ARE RELATING TO THE SHARE CAPITAL INTRODUCED BY DIKSHA SALES PVT.LTD. THESE ARE THE DOCUMENTS WHICH HAVE CONNECTION WITH THE SH ARE CAPITAL OF THE APPELLANT. THEY HAVE TO BE READ WIT H ANOTHER IMPORTANT DOCUMENT AT PAGES 70-74 OF SEIZED ANNEXUR E A- 1 (BASED ON WHICH PROCEEDINGS U/S 153A IN THE CASE OF BEST INFRASTRUCTURE (INDIA) PVT.LTD. ARE BEING UPHELD). ONLY THEN THE DOCUMENTS IN ANNEXURE-4 BECOME INCRIMINATING DOCUMENTS. 16. FROM THE ABOVE, IT IS EVIDENT THAT PAGES 60 AND 61 OF ANNEXURE A-1 CONSIDERED IN THE CASE OF THE ASSESSEE IS THE C HALLAN FOR PAYMENT OF THE FEES PAID BY THE ASSESSEE TO MINISTRY OF COR PORATE AFFAIRS. ADMITTEDLY, THESE PAPERS CANNOT BE SAID TO BE INCRI MINATING MATERIAL. ANNEXURE A-3 PAGES 41, 42 & 43 ARE BANK STATEMENT O F THE APPELLANTS ACCOUNT MAINTAINED WITH ICICI BANK, ROHINI, DELHI. PAGE 64 OF ANNEXURE A-3 IS RTGS TRANSACTION REQUEST FROM AXIS BANK LTD. AND PAGE 66 IS ALSO A LETTER OF THE APPELLANT REQUESTIN G THE BRANCH MANAGER, ICICI BANK FOR TRANSFER OF FUNDS FROM THEI R ACCOUNT. ADMITTEDLY, NONE OF THE ABOVE DOCUMENTS IS INCRIMIN ATING MATERIAL. ITA-2739 TO 2744/DEL/2014 13 ANNEXURE A-4 PAGE 72 IS THE LEDGER ACCOUNT OF DIKSH A SALES PRIVATE LIMITED IN THE BOOKS OF THE ASSESSEE. PAGE 73 IS T HE LETTER SENT BY DIKSHA SALES PRIVATE LIMITED ADDRESSED TO ACIT WRIT TEN IN RESPONSE TO NOTICE U/S 133(6) FOR ASSESSMENT YEAR 2007-08. LEA RNED CIT(A) IS OF THE OPINION THAT THE ABOVE TWO DOCUMENTS I.E., PAGE 72 & 73 OF ANNEXURE A-4 CAN BE HELD TO BE INCRIMINATING MATERI AL IF THEY ARE READ WITH PAGES 70 TO 74 OF ANNEXURE A-1 FOUND IN THE CA SE OF M/S BEST INFRASTRUCTURE (INDIA) PVT.LTD. WE HAVE ALREADY CO NSIDERED PAGES 70 TO 74 OF ANNEXURE A-1 IN THE CASE OF M/S BEST INFRASTR UCTURE (INDIA) PVT.LTD. AND HAVE FOUND THAT THE SAID DOCUMENTS ARE NEITHER INCRIMINATING IN NATURE NOR RELEVANT TO THE ASSESSM ENT YEARS UNDER APPEAL. EVEN OTHERWISE, THE DOCUMENT CONSIDERED IN THE CASE OF THE ASSESSEE IS A COPY OF ACCOUNT OF ONE PARTY IN THE B OOKS OF THE ASSESSEE AND A CONFIRMATION LETTER WRITTEN BY THE SAID PARTY TO THE ASSESSING OFFICER IN RESPONSE TO NOTICE ISSUED U/S 133(6). W E ARE UNABLE TO FIND ANY GOOD REASON TO CONSIDER THE ABOVE DOCUMENT AS I NCRIMINATING MATERIAL. HOW A COPY OF ACCOUNT OF SOME PARTY IN T HE BOOKS OF THE ASSESSEE CAN BE CONSIDERED TO BE AN INCRIMINATING M ATERIAL? SIMILARLY, HOW A REPLY GIVEN BY THE SAID PARTY TO THE ASSESSIN G OFFICER IN RESPONSE TO SUMMONS U/S 133(6) CAN BE HELD TO BE IN CRIMINATING MATERIAL. WE ARE UNABLE TO FIND ANY LOGIC TO HOLD THESE DOCUMENTS AS INCRIMINATING MATERIAL EVEN IF THESE DOCUMENTS ARE CONSIDERED ALONG WITH PAGES 70 TO 74 OF SEIZED ANNEXURE A-1 IN THE C ASE OF M/S BEST INFRASTRUCTURE (INDIA) PVT.LTD. 17. IN VIEW OF THE ABOVE, WE HOLD THAT NO INCRIMINA TING MATERIAL WAS FOUND IN THE CASE OF THE ASSESSEE AND THEREFORE, TH E DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KA BUL CHAWLA (SUPRA) AND RRJ SECURITIES LTD. (SUPRA) WOULD BE SQUARELY A PPLICABLE. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THAT THE ADDITIONS OF `83,00,000/- ON ACCOUNT OF UNEXPLAINED SHARE CAPITA L AND `1,86,750/- ITA-2739 TO 2744/DEL/2014 14 FOR EXPENDITURE ON COMMISSION MADE IN ASSESSMENT YE AR 2007-08 AND OF `7,17,00,000/- ON ACCOUNT OF UNEXPLAINED SHARE C APITAL AND `16,13,250/- FOR EXPENDITURE ON COMMISSION MADE IN ASSESSMENT YEAR 2008-09 BE DELETED. 18. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 08.02.2017 . SD/- SD/- (KULDIP SINGH (KULDIP SINGH (KULDIP SINGH (KULDIP SINGH ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VIC VICVIC VIC E PRESIDENT E PRESIDENT E PRESIDENT E PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S BEST INFRASTRUCTURE (INDIA) PVT.LTD. AND M/S BEST INFRASTRUCTURE (INDIA) PVT.LTD. AND M/S BEST INFRASTRUCTURE (INDIA) PVT.LTD. AND M/S BEST INFRASTRUCTURE (INDIA) PVT.LTD. AND M/S BEST CITY DEVELOPERS INDIA PVT.LTD., M/S BEST CITY DEVELOPERS INDIA PVT.LTD., M/S BEST CITY DEVELOPERS INDIA PVT.LTD., M/S BEST CITY DEVELOPERS INDIA PVT.LTD., PLOT NO.H PLOT NO.H PLOT NO.H PLOT NO.H- -- -8, 1 8, 1 8, 1 8, 1 ST STST ST FLOOR, BEST PLAZA, FLOOR, BEST PLAZA, FLOOR, BEST PLAZA, FLOOR, BEST PLAZA, NETAJI SUBHASH PLACE, PITAMPURA, NETAJI SUBHASH PLACE, PITAMPURA, NETAJI SUBHASH PLACE, PITAMPURA, NETAJI SUBHASH PLACE, PITAMPURA, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 034. 110 034. 110 034. 110 034. 2. RESPONDENT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -11, NEW DELHI. 11, NEW DELHI. 11, NEW DELHI. 11, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR ..ENCLOSURE - ANNEXURE-A (5 PAGES) ITA-2739 TO 2744/DEL/2014 15 ITA-2739 TO 2744/DEL/2014 16 ITA-2739 TO 2744/DEL/2014 17 ITA-2739 TO 2744/DEL/2014 18 ITA-2739 TO 2744/DEL/2014 19